2007 in Fiji Where to from Here?
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2007 2007 in Fiji Where to from here? Author – Sophie Cottom Associate HVS International – Sydney, Australia HVS INTERNATIONAL SYDNEY Level 1, 5 Elizabeth Street Sydney NSW 2000 Australia Tel: (61) 02 ‐ 9233 1125 Fax: (61) 02 – 9233 1147 Email: [email protected] Web: www.hvsinternational.com Sydney Singapore Hong Kong London Madrid New Delhi São Paulo Buenos Aires New York San Francisco Boulder Denver Miami Dallas Chicago Washington, D.C. Weston, CT Phoenix Mt. Lakes, NJ Vancouver Toronto Over the last few years, Fiji has emerged as a tourism hot spot in the South Pacific welcoming over half a million visitors in both 2004 and 2005. This growth in visitation was underpinned by the public’s perception of Fiji as a ‘safe heaven’ in contrast to other near- regional destinations that suffered tourism downturns due to terrorism activity. However, 2006 was a difficult year for Fiji’s tourism industry as a result of re-emerging political unrest. Yet with several large-scale resorts currently under construction, the future success of Fiji is dependent on continuous growth in tourism visitation. Consequently, this article aims to review the events of 2006 in light of the effects of prior disturbances on visitor arrivals in an attempt to determine what path Fiji’s tourism industry may follow in 2007 and beyond. Map of Fiji Source: Lonely Planet Website 2006 was expected by many stakeholders to be a promising year for tourism on the back of very strong growth in arrival numbers in 2004 and 2005. However, the combination of negative perceptions associated with the general elections in May, the introduction of a 3% bed tax in June and the events leading up to the December 5 coup appear to have disrupted the continued growth of visitation to the otherwise peaceful South Pacific nation. Sydney Singapore Hong Kong London Madrid New Delhi São Paulo Buenos Aires New York San Francisco Boulder Denver Miami Dallas Chicago Washington, D.C. Weston, CT Phoenix Mt. Lakes, NJ Vancouver Toronto Historic Visitation Trend When looking back at visitation to Fiji after times of unrest, it is evident that tourism arrivals have returned relatively rapidly. Following the prior upheaval in 2000, which led to a 29% decline in arrivals, tourism figures escalated rapidly in the ensuing years to exceed 1999 levels by 2003. Further growth was reported in 2004 and 2005 by 17% and 6% respectively. The following graph illustrates these trends. Table 1 Total Number of Visitors to Fiji – 1994-2005 600,000 25% 500,000 15% 400,000 5% 300,000 -5% 200,000 -15% 100,000 -25% 0 -35% 94 95 96 97 98 99 00 01 02 03 04 05 19 19 19 19 19 19 20 20 20 20 20 20 Total % Change Note: the 2004 visitor arrival numbers have been released provisionally by the Fiji Islands Bureau of Statistics, while the 2005 numbers are estimates from the Fiji Visitors Bureau. Official data for 2006 is not yet available. Source: Fiji Islands Bureau of Statistics/Fiji Visitors Bureau Further analysis of tourism arrivals by country of origin indicated that all of Fiji’s main source markets experienced a sharp downturn in 2000, before experiencing various degrees of recovery as depicted in Table 2. Table 2 Visitor Arrivals by Source Countries with 1999 as Base Level – 2000-2004 160% 140% 120% 100% 80% 60% 40% 20% 0% Australia New Zealand Japan USA United Kingdom Europe Other Total 2000 2001 2002 2003 2004 Source: Fiji Islands Bureau of Statistics/Fiji Visitors Bureau Sydney Singapore Hong Kong London Madrid New Delhi São Paulo Buenos Aires New York San Francisco Boulder Denver Miami Dallas Chicago Washington, D.C. Weston, CT Phoenix Mt. Lakes, NJ Vancouver Toronto Australian Market The Australian market is Fiji’s main source market accounting for over a third of visitation. The Australian market declined by 35% in 2000 before experiencing one of the fastest recoveries among all source markets, with visitor arrivals exceeding 1999 levels in 2002. This turnaround may be explained by the fact that Australia is one of Fiji’s closest neighbours, therefore lead-time for bookings are generally shorter, which leads to a quick return to normal once any threat to safety has passed. The strong surge in visitor arrivals in 2003 and 2004 may be the result of the 2002 Bali bombing with Fiji benefiting from a relocation of travellers that are still shying away from the Indonesian island as well as the introduction of a low cost airline - Pacific Blue in early 2004. Based on outbound figures for the year ended August 2006, as disclosed by the Australian Bureau of Statistics, we anticipate visitation to remain stable in 2006 before growing quite rapidly from 2007 onwards. New Zealand Market The New Zealand market bears a lot of resemblance to the Australian market with New Zealand travellers accounting for about 20% of total visitation. The New Zealand market declined by over 30% in 2000 before rebounding strongly in 2001 and recovering to 1999 levels by 2003. The strong surge in visitation in 2004 may be linked to the reduction in Air New Zealand airfares owing to the introduction of Pacific Express services in 2004. Similarly, the commencement of a low-cost airline - Freedom Air - in early 2005 is stimulating demand for travel to Fiji. Based on outbound figures for the year ended November 2006, as disclosed by Tourism Research New Zealand, we anticipate visitation in 2006 to marginally decline before gradually increasing to return to 2005 levels by 2007. Japanese Market The Japanese market experienced the worst decline in 2000, by nearly 50%, and is yet to return to 1999 levels of visitor arrivals. This significant decrease may stem from the combined effect of Japanese travellers being traditionally apprehensive and avoiding ‘dangerous’ destinations as well as the withdrawal of Air New Zealand services from Osaka and Nagoya in 2000. However, Japanese visitors returned to Fiji in 2001 and 2002, before falling away in 2003 probably as a result of the negative impact of SARS on air travel. Conversely, the recent growth of the Japanese economy may translate into higher disposable income and eventually an increase in outbound travel. That said, we anticipate visitor arrivals from Japan to continue declining in 2006 and 2007 before slowly improving in the ensuing years. Sydney Singapore Hong Kong London Madrid New Delhi São Paulo Buenos Aires New York San Francisco Boulder Denver Miami Dallas Chicago Washington, D.C. Weston, CT Phoenix Mt. Lakes, NJ Vancouver Toronto USA Market Interestingly, the American market was the least affected by the events of 2000 with a 15% reduction in visitor arrivals. Similarly, by 2001, total arrivals from this market were practically back to 1999 levels before stagnating for another two years. This may stem from the fact that Americans travellers coming to Fiji are experienced and are likely to base their travel decisions on a range of factors including personal safety. Additionally, Americans in Fiji tend to visit less-travelled destinations such as Vanua Levu or stay on island resorts, which are typically less impacted by security problems than the larger resorts on Vitu Levu. That said, early indications of visitor arrivals are for a decline in visitation in 2006 and growth is unlikely in 2007. We anticipate visitor arrivals to recover quite strongly in the three years thereafter, supported by the openings of several large-scale resorts to be managed by well-known hotel operators with strong affiliation in the USA. UK Market Fiji is a long-haul destination for UK travellers and, although the island is part of the Commonwealth countries, the prevailing economic environment in the UK does influence demand for long haul travel. Visitation declined by some 27% in 2000 before rebounding quite rapidly and returning to 1999 levels by 2002. Contrary to the Australian market, the lead-time for bookings is generally longer which, combined with the fact that UK travellers tend to be resilient, may explain why the decline in visitation was not as profound as that of other markets. We anticipate the UK market to have proven resilient in 2006 with an expected limited increase in visitation to be followed by stronger growth over the ensuing years. Overall, the Australian and New Zealand markets proved the most resilient by achieving the strongest average annual growth between 2000 and 2005 by 20% and 17% respectively. Historic Hotel Performance An analysis of quarterly occupancy levels to Fiji’s main tourism regions (Nadi, Coral Coast, Mamanucas and Suva) indicates that, while all of these areas were affected by the downturn in visitation in 2000, the Coral Coast and Nadi were particularly afflicted. Occupancy levels declined to 20% and 47% during the September quarter in these two areas respectively. This correlates with the decline in visitation from both Australia and New Zealand, since Nadi and the Coral Coast feature Fiji’s largest resorts, which attract primarily Australian and New Zealand tourists. Interestingly, the Mamanucas appeared to have been affected differently by the unrest, with demand for accommodation experiencing a stronger decline in 2001 than in 2000. A potential explanation could be that the resorts located in the Mamanucas cater to a different clientele, comprising primarily Europeans, Americans and Japanese. Sydney Singapore Hong Kong London Madrid New Delhi São Paulo Buenos Aires New York San Francisco Boulder Denver Miami Dallas Chicago Washington, D.C. Weston, CT Phoenix Mt. Lakes, NJ Vancouver Toronto Table 3 Quarterly Room Nights Sold to Fiji’s Main Tourism Regions